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Bad (and Worse) Corruption

Ray Fisman, writing in Foreign Policy, explains that some types of corruption are better than others: “In an orderly, predictable — yet corrupt — system, businesses can at least calculate expected returns and plan accordingly.  Paying bribes to an unstable or unpredictable government, on the other hand, requires a leap of faith and a quick exit strategy.” Viewed in this light, the recent Rio Tinto trial in China may actually be bad for business as “it might be signaling to foreigners that they are entering a new era of uncertainty over the rules that govern their interactions with Chinese bureaucrats.”[%comments]


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